Drivers of Innovation Panasonic is nearly one hundred years old. The company’s epic history is told at the Konosuke Matsushita Museum outside Tokyo. I’ve been to many company HQs that have a wall or a room devoted to product evolution, but I’d never before toured an entire museum devoted to the subject. In walking through the exhibits, I could trace Panasonic’s evolution from a maker of humble electrical plugs, sockets, and fittings to the global consumer-electronics colossus it is now.

Much to my surprise, I also discovered that many of today’s most advanced management practices—social consciousness, employee profit sharing, an emphasis on customer service, succession planning, MBWA (Management by Walking Around), and separate P&L centers to better manage growth—were pioneered long ago by Panasonic’s founder, Konosuke Matsushita.

The museum doesn’t neglect the 1965 launch of the original Technics. The brand was introduced as part of a then-new corporate focus on “pure sound.” Thus, from its very inception, Technics reflected the Japanese audio industry’s philosophy of music without adulteration.

After my museum visit, I traveled to Osaka to meet Michiko Ogawa, who is Director of the Technics business unit. Interestingly, she is also a popular pianist and singer in Japan. Ogawa-san gave me her perspective on why big companies are taking new—in the case of Sony—or renewed—in the case of Panasonic—interest in the high end. She told me that during Japan’s long depression consumer electronics sales went flat. In response, both Sony and Panasonic, like Gibson, began seeking new markets with growth potential.

Yet it’s no secret that high-end audio has always been a cottage industry. So why invest there? The impetus, according to Ogawa-san and echoed by Sony executives I’ve met, can be summed up in two words: high resolution. To elaborate, the Japanese view is that the recent widespread availability of hi-res source material can serve as a promising catalyst for high-end audio growth. Hi-res audio also fits into Panasonic’s (and Sony’s) involvement in the ongoing development of Blu-ray and other hi-res video technologies. As Technics’ CTO Tetsuya Itani put it: “It makes sense for Panasonic to offer audio that can deliver a level of resolution and involvement similar to high-end video.”

Like Esoteric, Technics is deliberately independent of its parent. The management team is completely separate from Panasonic’s, as is R&D. Yet the parent company is investing generously, giving Technics the wherewithal to push technological advancement. Technics also gets to piggyback on Panasonic’s expansive manufacturing and training facilities. What does Panasonic get out of the deal? Technology that may prove useful elsewhere, “halo” audio products, and a new revenue stream.

Because the Technics R1 References Series is so chock-full of technical advances, I asked Ogawa-san if she has seen a change in that regard. She told me that Technics views innovation as a means of competing against boutique brands that can’t afford a similar level of R&D. Culturally, this innovation is made possible because, as Sheen had noted in our meeting, lifetime employment is fading—and with it the cultural proscriptions against independence and individuality. Indeed, Ogawa-san encourages her engineers to pursue any ideas that will allow Technics to blaze technology trails.